Harvard's gift to the non-super-rich may harm poor

Harvard last month announced a new financial aid policy aimed at making tuition affordable to families with incomes up to $180,000. Families with incomes from $120,000-$180,000 would have tuition capped at 10 percent of their income — a big chunk of assistance toward Harvard's full $45,000 annual tuition. Sounds great at first reading, but many say it could hurt low-income students.

Here's the New York Times story about the announcement:

Harvard steps up financial aid
BOSTON, Dec. 10 — Harvard University announced today that it would significantly increase the financial aid it offers to nearly all middle-class and upper-middle-class students, expanding on efforts it made three years ago to make its campus affordable for low-income students.
The initiative appears to make Harvard’s aid to students with household incomes of $120,000 to $180,000 the most generous to be offered by any of the country’s elite private universities. Harvard will generally charge such students 10 percent of their family household income per year, substantially subsidizing the annual cost of more than $45,000.

Click here for the rest of the story.

And from the story, this is of interest to San Francisco families, who even in the current real estate crisis may be likely to be sitting on lots of home equity:

The university also plans to eliminate loans from all financial-aid packages and no longer consider home equity in calculating eligibility

And now other pricey private colleges are under pressure to follow Harvard's lead. The N.Y. Times covered that a few days ago. Some excerpts from the Dec. 28 article Harvard’s Aid to Middle Class Pressures Rivals:

By substantially discounting costs for all but the very wealthiest students, Harvard shook up the landscape of college pricing. ... officials of other colleges say its move will create intense pressure on them to give more aid to upper-middle-class students and will open the door to more parental price haggling.
Some colleges had already been moving to eliminate loans from all their financial aid packages and replace them with grants. In the weeks since Harvard’s announcement, a stampede of additional institutions — the University of Pennsylvania, Pomona, Swarthmore, Haverford — have taken the same step, which will help middle- and upper-middle-income families.
But Harvard, in adopting that practice, has also gone far beyond it: for families earning $120,000 to $180,000 a year, costs will now be limited to about 10 percent of income, meaning that students from such families will pay a maximum of $18,000, a deep discount from the university’s full annual cost of more than $45,600.
Officials at colleges without anything like Harvard’s $35 billion endowment say a rush to give tuition discounting to the middle and upper middle class at institutions like theirs could end up shifting financial aid from low-income students to wealthier ...

In the competitive scramble for prestige and rankings, numerous colleges already try to lure some top students away from the Ivy League by showering them with “merit aid” even if they are well off and can afford full tuition. The practice is controversial, with some college administrators scorning it as a way of “buying” a better incoming class, sometimes at the expense of lower-income students.
Some administrators say there will now be pressure to provide more merit aid to relatively wealthy high achievers, reducing the amount available to poorer students.
“It could lead to schools’ doing this sort of thing because they want to be part of the top group,” David W. Oxtoby, president of Pomona College in California, said of Harvard’s move. If that meant those colleges had to reduce the number of their low-income students, Dr. Oxtoby said, “that would be terrible, exactly the wrong outcome.” (Pomona itself, where full costs are more than $45,000, does not provide merit aid.)
Some academics who study higher education predict that Harvard’s decision may even reduce economic diversity at Harvard itself, even though the university already allows any admitted student from a family earning $60,000 or less to attend virtually free of charge.
Donald E. Heller, director of the Center for the Study of Higher Education at Pennsylvania State University, said that if Harvard’s new aid program encouraged more middle- and upper-middle-income students to apply, then the number of slots for low-income applicants in an entering class would probably decline.
“They’re just going to get crowded out,” Dr. Heller said.

Click here for the whole article.

If you ask me, California's UC/CSU systems are looking better and better.